Atlanta BeltLine's Public Funding Should be Eliminated

Last Friday, the Atlanta-Journal Constitution printed my editorial on the Atlanta BeltLine. The piece argued that the BeltLine transit component is unworkable. In addition, parks and trails do not represent an Economic Development strategy. Further, the BeltLine has a tremendous Jobs/Housing imbalance. Finally, the lack of quality schools near the BeltLine present a tremendous challenge in luring families to the area.

I strongly support private developers building the BeltLine with private funds. But I cannot support Atlanta BeltLine, Inc. using federal, state, or local taxpayer funds to build this project. Such subsides distort the market and allow billionaire developers to make a profit at taxpayers’ expense. Traditionally, construction of transit and parks is overseen by the city’s comprehensive planning, permitting and civil works division. The fact that the BeltLine is managed by a special city redevelopment authority, which has spent most of its resources on public relations rather than construction or finance management is a major problem.

In response, Atlanta BeltLine Inc., which was created by the Atlanta Development Authority, wrote an entry on their website where they “checked the facts of my Op-ed.” While their posting was entertaining, it added little new content. Since I have received several questions about my original Op-Ed, I want to discuss the topic in more detail. First, I will propose several arguments that I did not address in the AJC Op-ed due to space constraints. Second, I will specifically address why the BeltLine, Inc’s “facts” are incorrect and misleading.

BeltLine, Inc.’s management of the project has created several new problems for the city of Atlanta. First, the BeltLine ties up 75% of the city’s capital bonding power for the next 20-30 years. This severely limits the city’s ability to address other issues. For example, the pavement on many city streets is in serious need of repaving. According to Atlanta Public Works Commissioner Richard Mendoza, the city of Atlanta should be doing five times the current amount of street paving to keep up with the usual wear and tear but lack of funds presents a major obstacle. Bonding could provide some of these needed funds. The city faces other challenges such as keeping its recreation centers open and in good repair. The city could renovate these centers by issuing bonds. Further, Atlanta could update its police and fire equipment through issuing bonds. Bonds alone will not solve Atlanta’s fiscal challenges; but they could certainly help the city make additional investments.

The next problem is that the BeltLine proposal completely ignores the real estate market. Large numbers of properties have been rezoned for higher densities. But there is no demand for this density today. And it is unlikely Atlanta residents will ever demand this level of density. Atlanta is the least dense metro area in the world with more than 3,000,000 people. Residents of the city of Atlanta have not shown an interest to live in dense surroundings. And even if the city of Atlanta wanted to increase its density, most suburbs do not. As Atlanta is part of a region, it needs to consider not just itself but all of the municipalities around it.

Another problem is that the BeltLine favors one geographic region of the city over another. The BeltLine may help residents of the northeastern segment at the expense of all other regions. The BeltLine received federal grants because it promised to redevelop low-income minority neighborhoods in southeast and southwest Atlanta. So far, the only change in these areas has been real estate speculation that has forced many of the low-income minority residents out of their homes. But the BeltLine has spent more than half of the total funding on the 20% of land in the northeast quadrant.

In order to detail the many, many problems with Atlanta BeltLine, Inc.’s logic, I am going to borrow a segment from Bill Maher’s TV show. On his show Maher argues that some politicians are living in a bubble or a world divorced from reality. In Atlanta, BeltLine proponents live in an alternative world where building parks and bicycle paths can solve all of the city’s problems.

Fact 1: Building Trails and Park Space is not a viable economic development strategy.

BeltLine fact from inside the bubble: There has been more than $1 billion in private redevelopment within the BeltLine TAD since 2005. In the Atlanta BeltLine planning area (1/2 mile on either side of the rail corridor) there are more than 90 new developments either completed or in progress, representing more than 12,000 new residential units and 1,500,000 new non-residential square feet. Within a 1/2 mile of the Eastside Trail there has been $775 M in new private redevelopment complete or underway since 2005. In the immediate area around Historic Fourth Ward Park alone there are more than 1,300 new residential units completed or underway.

Much of the development in this geographic area would have occurred without Atlanta BeltLine, Inc. Economic development experts estimate that 10% of the development at most is due to Atlanta BeltLine Inc. Further, most of the new positions are service jobs in restaurants, banks and retail, and most of these new employees will not be able to afford to live in the high-priced residences on the BeltLine. The city needs more professional jobs. In addition, most of the development has occurred in just 1/5 of the BeltLine. Not coincidentally this was the same area that was attracting development before the formation of Atlanta BeltLine, Inc. Using city of Atlanta data and economic development experts 10% figure, the BeltLine has generated $100,000,000 of economic activity over 6 years. There is no major city in the country that would brag about this kind of result.

Fact 2: Atlanta has many jobs, but few are near the Beltline.

BeltLine fact from inside the bubble: More than 175,000 jobs within a 1/2 mile of the Atlanta BeltLine corridor and streetcar lines included on the Transportation Investment Act project list. (ARC analysis of Bureau of Labor Statistics data)

Almost all of these commercial jobs are located at a few locations. And since residential activity is dispersed throughout the BeltLine very few people actually live near a job. Second, BeltLine, Inc. is counting two auxiliary future rail routes that were not part of the original BeltLine concept. One of these routes is a future east-west rail line passing through the heart of Midtown. By expanding the physical presence of the BeltLine, BeltLine, Inc can expand its job base claim. But residents and employees near North Ave and Peachtree St are not considered a part of the BeltLine. Third, in a metro area with 5,500,000 residents, the fact that BeltLine proponents count every conceivable area that is in any way connected to the BeltLine to reach 175,000 jobs shows the lack of jobs in this area.

Fact 3: “Without quality schools and jobs nearby, you’ll have a few Beltline areas that are attractive to childless 20-somethings and empty nesters.”

BeltLine fact from inside the bubble: Again – the market and demographic trends say differently. There has been more than $1 billion in new private redevelopment in the BeltLine TAD since 2005, and $775 million of private sector redevelopment either completed or underway within a half mile of the trail that has taken place since 2005. According to the ARC, 20-somethings (millennials) and empty nesters are the fastest growing segments of our population and prefer to live in walkable, transit-rich communities, like those developing around the Atlanta BeltLine. The schools near the Atlanta BeltLine include Inman Middle School, Grady High School, Morningside Elementary, John Hope Elementary, Maynard Jackson High School, Atlanta Neighborhood Charter School, Mary Lin Elementary, Booker T. Washington High School, and the Schools at Carver. More than 20 schools are located on or near the Atlanta BeltLine. Some of them are among the best performing in the city.

I think the above argument makes my point. Millennials and empty nesters are a growing parts of our population but their needs will change over time. Today’s millennials will become 30-somethings, have kids, and need what all parents need: affordable quality schools. Most empty nesters today are choosing to age in place, not move to the BeltLine. The BeltLine’s problem is its lack of appeal for 30-65 year-olds with kids who need good schools. And these people are not moving to the BeltLine area. Yes, some of the schools near the BeltLine are strong. But many more are among the weakest in the state. In every testing category Atlanta schools trail their counterparts in Fulton County. This is despite the fact that both have near equal percentages of wealth and poverty and similar percentages of whites and minorities. The Atlanta school district’s graduation rate of 52% among the 11 major Urban school districts is the worst in the country. While Atlanta is again trying to improve its schools, the poor graduation rate and test scores are a real problem.

Fact 4: “…effective transit systems transport people from where they live to where they work, play and shop. The Beltline connects residential areas with other residential areas.”

BeltLine fact from inside the bubble: The Atlanta BeltLine is spurring the creation of new, mixed-use districts, including residential and commercial development. It will also connect with the MARTA rail system and the Atlanta Streetcar network, getting people to and from the largest employment centers in the region. On the Atlanta BeltLine alone, it will connect job centers along 45 neighborhoods such as Piedmont Hospital and the Peachtree corridor.

The BeltLine transit component has been deep-sixed, hopefully forever. However, if it raises its ugly head again, it is unlikely there will be any money to build it. As a result, in the near future the BeltLine transit component will not connect anybody with anything. The 1-mile Atlanta Streetcar network along Martin Luther King Jr. Blvd may connect 10 people’s residences and workplaces. A report completed by five transportation professionals including American Public Transit Association President William Millar stated:

The paucity of ridership estimates for different transit options in the BeltLine corridor (especially given how far the BeltLine concept has come in the City’s policy agenda) is surprising. In some cases, individual projects have had ridership forecasts prepared, but it does not appear that credible ridership determinations have been made that consider the network effect of other transit projects that are being seriously considered.

It seems likely that solely from a transit ridership perspective, portions of this loop will not generate sufficient transit ridership to justify investment in high capacity transit infrastructure.

The currently proposed alignment of the BeltLine presents other significant technical issues associated with potential transit use in the BeltLine corridor such as: right-of-way width, freight use of rail lines, elevation differences, etc.

As was noted to the Panel by several speakers, the amount of revenue generated from the TAD is expected to cover only about half of what will be needed (and depending on the design and technology involved, this could be an underestimate). It is highly likely that additional sources of funding will be necessary to cover the costs associated with capital investment.

And so on and so on …The entire document is available here. The BeltLine white paper is particularly convincing because it was written by professional Engineers and Planners with years of experience. Counter this with the BeltLine’s public relations staff who have little experience in transportation but are very skilled in creating persuasive multimedia presentations absent actual facts.

Fact five: The BeltLine project has already cost taxpayers more than $260 million. In return, they’ve gotten wasteful expenses, a lack of accountability and an ill-conceived transit plan.”

BeltLine fact from inside the bubble: The return on investment for the Atlanta BeltLine is more than $1 billion in private redevelopment in the Tax Allocation District alone. Additionally the project has saved the city millions of dollars on critical infrastructure projects. For example, the storm water lake at Historic Fourth Ward Park, originally projected to cost $40 million as a traditional tunnel-like facility, cost only $24 million as part of an Atlanta BeltLine greenspace.

The BeltLine project has cost taxpayers $260 million and probably much more. We do not know the real costs because the BeltLine will not release the costs. Under Georgia law since BeltLine, Inc. is an economic development entity it is not required to disclose how it spends its money. Since much of this money comes from taxpayers, the BeltLine should post all of these costs in a place easily accessible to all taxpayers. As mentioned earlier, BeltLine, Inc. directly generated only $100 million of that $1 billion amount. According to figures posted on its website, the BeltLine has spent at least $260 million and likely a lot more. That is a negative return on investment of at least $160 million. And the $16 million the BeltLine saved with that stormwater lake does not make up for the $40 million that they overpaid for just one park—the 4th Ward Park.

The BeltLine concept is based more on unrealistic dreams than actual real estate and transit needs. The BeltLine, Inc.'s website, under thier response to my Op-ed, features a beautiful picture from a BeltLine event. Does the picture have anything to do with whether the BeltLine is a good use of taxpayer resources? Of course not. It is similar to a futuristic science fiction movie where society has become an uneducated mass lacking in critical thinking skills. When someone in the futuristic society starts asking questions, he is shown a beautiful picture designed to get him to think about something else. BeltLine, Inc. is using a very similar approach. Atlanta BeltLine, Inc. realizes that the facts fail to convince taxpayers that this project will go forward. Instead it is trying to distract residents with beautiful but meaningless pictures. But, taxpayers need not be sucked into this fantasyland. Taxpayers need to simply look at the facts.